Canada’s pension plan chief says the fund cannot avoid China even if risks remain high
- British Columbia Investment Management said it was halting direct investments in China due to geopolitical risks
- Ontario Teachers’ Pension Plan (OTPP) cited regulatory changes in China, heightened risk and deteriorating relations for pausing private-asset deals in the country
The head of Canada Pension Plan Investment Board (CPPIB) said that exposure to China remains important to the fund’s overall strategy but understanding the nation’s economy, and its global importance, is crucial.
Chief Executive Officer John Graham made the comments in response to a question about what it would take for China to become “uninvestible,” during an interview with Bloomberg Television. Canada’s largest pension fund has almost 10 per cent of its assets invested in China.
“It’s important for CPP Investments to be a global investor. And to be a global investor one needs to understand the big, fast-growing economies in the world,” Graham said. “We continue to believe we need to have exposure into China – we need to understand the economy and understand the economy’s influence on the rest of the world.”
Some US institutional investors have also been pulling funds out of China, a trend JPMorgan Asset Management expects to continue.
The first factor to consider when deciding on an investment is if the fund is getting paid appropriately for the risk, Graham said. “We will continuously debate what our allocation should be to any country and any asset class, based on what we think the forward returns will be,” Graham said.